Bastian v. AT&T Wireless Services

• Decision Date: 06 March 2000
• Docket Number: No. 99-2127,99-2127
• Citation: 205 F.3d 983
• Parties: (7th Cir. 2000) Steven Bastien, Plaintiff-Appellant, v. AT&T Wireless Services, Inc., Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 983

205 F.3d 983 (7th Cir. 2000)

Steven Bastien, Plaintiff-Appellant, v. AT&T Wireless Services, Inc., Defendant-Appellee.

No. 99-2127

In the United States Court of Appeals For the Seventh Circuit

Argued November 9, 1999

Decided March 6, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 0049--Charles P. Kocoras, Judge.

Before Bauer, Easterbrook and Kanne, Circuit Judges.

Kanne, Circuit Judge.

Steven Bastien sued AT&T Wireless Services, Inc. in an Illinois court over his allegations that the company misled him about his cellular telephone service. Congress has decreed that suits related to rates and service of telephone companies be handled in federal court, and despite Bastien's best efforts at crafting a state-law complaint, AT&T Wireless exercised its right to have Bastien's case removed to federal court. Bastien challenged the removal order and the jurisdiction of the federal district court to hear what he contended were state law matters. Because we read Bastien's complaint to challenge only AT&T Wireless's rates and right to enter the market on the terms specified by the FCC, we affirm the district court's ruling and hold that jurisdiction over Bastien's complaint belongs exclusively to the federal courts.

I. History

Until recently, the Chicago wireless telephone market consisted of Ameritech and Southwestern Bell (Cellular One). AT&T Wireless, a subsidiary of AT&T, entered the market in the late 1990s, after receiving approval of its rates and infrastructure arrangements from the Federal Communications Commission, as required by federal law. See 47 C.F.R. sec. 24.1 et seq. To encourage new market entrants, the FCC allows service providers to begin operations in an area before it has fully built out its network. For this reason, the service provided by AT&T Wireless in 1998 was far from flawless.

In 1998, Bastien signed up as an AT&T Wireless customer, although his complaint, filed in state court in Cook County, provided no information regarding the terms and conditions of his service agreement with AT&T Wireless. He quickly became dissatisfied with the quality of service. Because of the insufficient coverage provided by AT&T Wireless's network and also because of the inherent difficulties and unreliability of wireless service generally, many of Bastien's calls were "dropped," that is, cut off in mid-call. Dropped calls occur because of interference to the radio wave carrying the call, such as from tunnels, buildings and the rare Midwestern hill. A more fully developed infrastructure would lose fewer calls because there would be less chance of interference.

Upset about the number of dropped calls, Bastien complained to AT&T Wireless and was told that he could get refunds either automatically by redialing the dropped call within sixty seconds, or by later calling a customer representative and having a credit applied to his bill. Bastien took full advantage of both options, although he often was unable to get the automatic rebate by redialing since a source of interference that interrupts a call may prevent re- connection for longer than sixty seconds. Unhappy that the automatic credit option did not always work, Bastien complained to the FCC, but was told that AT&T Wireless was in full compliance with all FCC rules.

Bastien then filed suit in Illinois state court, alleging that AT&T Wireless breached its contract with him and committed consumer fraud. In the complaint, Bastien alleged that:

9. AT&T Wireless signed up subscribers without first building the cellular towers and other infrastructure necessary to provide reliable cellular connections.

10. As a result, a large proportion of attempts to place calls on AT&T Wireless' system are unsuccessful.

11. AT&T Wireless nevertheless continued marketing and selling its telephones and telephone service, without regard to the fact that it knew that it could not deliver what it was promising. . . .

23. By signing up subscribers without first building the cellular towers and other infrastructure necessary to accommodate good cellular connections to such subscribers, with the result that a large proportion of attempts to place calls on AT&T Wireless' system are unsuccessful, AT&T Wireless violated:

a. Its contracts; and

b. The implied duty of good faith and fair dealing under such contracts. . . .

25. AT&T Wireless violated sec. 2 of the Illinois Consumer Fraud Act, 815 ILCS 505/2 by committing unfair acts or practices as follows:

a. Signing up subscribers without first building the cellular towers and other infrastructure necessary to accommodate good cellular communications to such subscribers, with the result that a large proportion of attempts to place calls on AT&T Wireless' system are unsuccessful;

b. Misrepresenting the quality and benefits of its products and services;

c. Concealing the material facts that it did not have the capacity to handle the volume of its cellular calls; and

d. Failing to have appropriate means for crediting customers for incomplete calls.

26. AT&T Wireless knew that it was signing up subscribers without first building the cellular towers and other infrastructure necessary to handle the call range reasonably expected to be used by such subscribers, and that a large proportion of attempts to place calls on AT&T Wireless' system would be unsuccessful.

AT&T Wireless removed the case pursuant to 28 U.S.C. sec. 1441(b) on the ground that Congress had expressly preempted regulation of rates and market entry for mobile telephone service in the amendments to the Federal Communications Act of 1934, 47 U.S.C. sec. 332(c)(3)(A). That section states that "no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service or any private mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services." Id. With this preemption clause in mind, Bastien diligently attempted to state his claim in terms of Illinois state law actions. However, AT&T Wireless contended that Bastien's complaint in fact challenged AT&T Wireless's rates and right to enter the market, two subjects specifically granted to the primary jurisdiction of the FCC.

Bastien moved under Rule 12(b)(1) to remand the case to Illinois state court for lack of federal subject-matter juris diction, and AT&T Wireless moved for dismissal of the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim. Because the federal statute completely preempted the stated actions, Judge Charles P. Kocoras denied Bastien's 12(b)(1) motion and granted AT&T Wireless's motion to dismiss. Bastien appealed the denial of the 12(b)(1) motion to remand the case to state court. On appeal, he did not brief or argue the Rule 12(b)(6) dismissal so that issue is deemed waived. See Sere v. Board of Trustees, 852 F.2d 285, 287 (7th Cir. 1988).¹

II. Analysis

Bastien contends that his complaint properly set out two claims under Illinois law--breach of contract and consumer fraud--that were distinct from the rates and market entry claims specifically reserved for the FCC. As such, Bastien believes that the federal district court did not have jurisdiction to hear his case, and the doctrine of primary jurisdiction, which ordinarily would refer the case to the administrative agency, did not apply. If Bastien's complaint in fact raises regulatory issues preempted by Congress, then the claims would fail as a matter of law since they are couched in terms of two state law actions. In that case, Bastien's suit properly would be dismissed.

It is true that a plaintiff is a master of his own complaint and may seek to avoid federal jurisdiction by pleading only state law claims, see Franchise Tax Bd. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10 (1983); Taylor v. Anderson, 234 U.S. 74, 75-76 (1914); Lister v. Stark, 890 F.2d 941, 943 (7th Cir. 1989), but when that complaint, fairly read, states a federal question, the defendant may remove the case to federal court. See 28 U.S.C. sec. 1441(a)-(b); Burda v. M. Ecker Co., 954 F.2d 434, 438 (7th Cir. 1992) (holding that court may look beyond face of the complaint to determine if plaintiff "artfully pleaded" matters under state law that actually raise a federal question). Federal preemption normally would constitute a federal defense to a state law action, and therefore would not support removal from state court. See Gully v. First Nat'l Bank, 299 U.S. 109, 113 (1936). However, in some instances, Congress has so completely preempted a particular area that no room remains for any state regulation and the complaint would be "necessarily federal in character." See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). In that situation, removal is proper despite the well-pleaded complaint rule. See id.

There can be no doubt that Congress intended complete preemption when it said "no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service." 47 U.S.C. sec. 332(c)(3) (emphasis added). This clause completely preempted the regulation of rates and market entry, allowing removal to federal court, although the savings clause continues to allow claims that do not touch on the areas of rates or market entry. Therefore, Bastien's attempt to use the "well-pleaded complaint" rule to shield himself from federal court jurisdiction would be unavailing if his complaint in fact challenges rates or market entry. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 393 (1987); Metropolitan Life, 481 U.S. at 65-66 (holding that a purported state law claim that involves areas preempted by federal law must be recharacterized as a federal claim); Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1075 (7th Cir. 1992)....